As the merits and failings of Financial Fair Play (FFP) were being debated by Gary Neville and Jamie Carragher on Sky's Monday Night Football, it struck me how mainstream the discussion about FFP has now become. This next week however, promises to be the most significant yet as UEFA will likely announce their decisions by the 9th of May. Clubs that have played in UEFA competition this season who have breached the break-even FFP provisions will be sanctioned. The aim of this piece is to briefly explain what FFP is all about, the UEFA sanctions that will be imposed and what to expect over the coming months.
The FFP rules are to ensure that clubs become more self-sustainable by breaking-even in the medium to long term. UEFA, the Premier League and the Football League all have different regulations setting out the acceptable losses that clubs are able to make in order to avoid being sanctioned. Acceptable losses start from £105m over three years in the Premier League, to under £8m each year in the Football League Championship to €45m over two years for UEFA competitions. Sanctions will vary depending on the regulations but include transfer embargos in the Football League, potential points deductions in the Premier League and expulsion from competition in UEFA competitions.
UEFA FFP is the most topical right now as UEFA's Club Financial Control Body (CFCB) will be announcing its first break-even decisions shortly. The CFCB had previously stated that it has conducted in-depth reviews of around twenty clubs to assess whether those clubs had breached the UEFA FFP regulations. It is believed as many as ten clubs may be sanctioned. Out of those ten, two are reported to be Manchester City and PSG.
What are the sanctions likely to be?
The sanctions include a reprimand, a fine, the withholding of prize monies, a points deduction, a refusal to register players for UEFA competition, reducing a club's permitted squad size, disqualification from competitions in progress and/or exclusion from future competitions. It is worth noting that a number of the above sanctions can be used collectively or in isolation by the CFCB.
The CFCB also has the power to 'settle' with clubs who are in breach. Settlement gives the CFCB the ability to incentivise clubs who have breached the rules, to admit their guilt and receive a lesser sanction. Some compliant clubs have viewed this as a somewhat controversial power. This is because, in my experience of settlement, clubs will only admit to a breach if they are rewarded for such an admission. As such, the CFCB will have to offer sanctions which make it attractive not to take the matter all the way to the Court of Arbitration for Sport (CAS).
As a result, sanctions are likely to be weaker if settlement agreements are made with clubs. However such 'reduced' sanctions may still include large fines, points deductions and/or reductions in squad size. Bear in mind that a club can refuse to settle with the CFCB which will then lead to a formal decision, a UEFA hearing and a possible appeal to CAS.
The interesting impact of settlement is that 'affected parties' can appeal the settlement agreement between CFCB and the offending club. Such an affected party may be a club who has failed to qualify in the league for European competition, a club who qualified in the league but finished lower than the offending club (which could have financial implications) or a club who played the offending team this season or who my play them next season. It will soon be clearer who will be classed as an affected party and whether they can challenge the settlement process.
In summary, it appears likely that a number of clubs who have breached the UEFA FFP break-even regulations will enter into settlement agreements with the CFCB. While settlement may allow FFP defaulters to escape a full ban, it also opens up a new process by which a team's rivals could challenge their Champions League/Europa League place.
With the sanctioning decisions now just a few days away, many stakeholders will await the CFCB decisions with interest. The new settlement procedure is in force and may cause controversy in instances where a club is in breach but is not sanctioned to the same extent it would have been had it gone through the 'normal' CFCB procedure.
This blog was first published in the Mirror newspaper here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.